Science Finds Money Can Buy Happiness, if You Spend It Right

Invest in happiness.

FIONA MACDONALD

8 APR 2016

Despite decades of people telling us that money can't buy happiness ("it's all about the experiences!"), researchers have found new evidence that spending actually can make our lives a whole lot better - as long as you buy the right things.

So what should you purchase in order to bring yourself some much-needed joy? The scientists looked at nearly 77,000 bank transactions in the UK, and found that people who spend money on purchases that suited their personality traits were more satisfied with life.

That sounds pretty obvious, but this is one of the first studies to show that spending money on ourselves - and not just giving it away - can actually make us happier, if we do it right.

"Historically, studies had found a weak relationship between money and overall wellbeing," said lead researcher Joe Gladstone from the University of Cambridge. "Our study breaks new ground by mining actual bank-transaction data and demonstrating that spending can increase our happiness when it is spent on goods and services that fit our personalities and so meet our psychological needs."

But in order to unlock the benefits of spending money, you first need to understand yourself.

In the study, the researchers worked with a major bank and convinced 625 anonymous participants to take a test that measured how strong they were in the 'Big Five' personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

They also asked them to take a life satisfaction questionnaire, and looked at their bank transaction data over a six-month period to see what they were spending on. Almost 77,000 transactions were broken down into categories associated with personality traits.

You can see an example of those categories below, and where they fall in each personality trait (either low or high). And believe it or not, some personality types out there don't mind spending their money on traffic fines:

The researchers found that not only did people spend more money on things linked to their strong personality traits - for example, extraverts spent on average US$73 more per year on pub nights than introverts - but they were also happier the more they spent on things that suited their personality.

Not only that, but life satisfaction was more closely tied to those 'personality appropriate' purchases, rather than total income or total spending - so it wasn't just that these people were enjoying more money, it was what they were spending it on making all the difference.

The team backed this up with a second experiment that involved giving people one of two vouchers: either to spend at a bar, or to spend at a bookshop. The extroverts who were forced to spend their vouchers at a bar were happier than introverts, while the introverts were more satisfied than the extroverts when they spent the book voucher.

"Our findings suggest that spending money on products that help us express who we are as individuals could turn out to be as important to our wellbeing as finding the right job, the right neighbourhood or even the right friends and partners," said one of the researchers, Sandra Matz.

Although the research hands down some pretty great advice for all of us - think about how what you're about to buy fits your personality traits before you spend - the scientists also hope it could one day help online retailers make better suggestions.

"By developing a more nuanced understanding of the links between spending and happiness, we hope to be able to provide more personalised advice on how to find happiness through the little consumption choices we make every day," said Matz.